<< I was just wondering what everyone's return was on their 401(k) or other investment accounts was for the year.

I had a 22.2% return for 2003. I am new to investing and thought that this was pretty good since most things that I read say expect the average of 10% return. This is much better than last year when I had a -2%.

How did you do? >>

The portfolio in my wife's 401(k) got +32.25% for 2003, but the year before it was a –10.8%. Like you, over the last 2 years I have “averaged” in the realm of 10%+. But over the last 4 years the average has only been +5.84%. So you see, just what kind of “average” you might have really depends on what segment of time you carve out of a list of variable returns. And I might add, you need to be very careful about your thinking about “average” returns using constant rate thinking.

For example, this 401(k) “average” rate of return was 5.84% over the last 4 years (11.33% -9.93% -10.3% +33.25%/4). The actual return over that period calculates out to be 3.55%. But . . . if I had earned 5.84% EACH year instead of it being the variable return as shown, the 401(k) would have had 5.5% more in it today.

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